The IRS announced in March that they would close the Offshore Voluntary Disclosure Program (OVDP) this week. Amnesty programs like the OVDP affect expats specifically since so many expats are unaware of their obligation to file. What should expats know in advance of this deadline? Read on for the details.
The Offshore Voluntary Disclosure Program Is Meant for Willfully Noncompliant Taxpayers
The OVDP was created in 2009 as a temporary program to help taxpayers who were willfully hiding money in foreign accounts to become compliant without fear of prosecution. Since its inception, over 56,000 taxpayers have used this program to become compliant. The usage rate has dropped each year, leading the IRS to close the program.
The Offshore Voluntary Disclosure Program Prevents Criminal Prosecution But Not Hefty Penalties
Delinquent taxpayers who use the OVDP may be safe from prosecution, but the penalties associated with the program are often astronomical. However, some civil penalties are avoided using this program, and the ability to escape prosecution is usually enough to make this program attractive to those who are hiding assets in offshore accounts.
The IRS Will Still Be Seeking Noncompliant Taxpayers to Prosecute
The IRS will still look to bring legal action against those hiding money in foreign accounts, and prevent and fight against future tax fraud, via taxpayer education, whistleblower leads, civil examination, and criminal prosecution. They have also said that finding those who have undisclosed offshore accounts remains a top priority.
Expats Who Didn’t Know About Filing Requirements Can Still Use Streamlined Filing Procedures – For Now
Most noncompliant expats are not intentionally avoiding filing. In other words, they have no idea they were expected to file annual tax returns while living in another country. In this case, expats can use the Streamlined Filing Procedures to get caught up on their expat taxes penalty-free! But the closure of the OVDP could signal that the era of IRS leniency is coming to an end, and the Streamlined Filing Procedures may well be on their way out, too. If you’re interested in using the Streamlined Filing Procedures, get started today.
The Best Course of Action? Get Caught up Now
The closure of the Offshore Voluntary Disclosure Program is right around the corner. If you need to use the OVDP to get caught up, you should take immediate action, as time is running out. If you can use the Streamlined Filing Procedures, immediately doing so is also recommended, because the IRS may terminate that program at any time.
Let Greenback Take the Anxiety out of Tax Compliance
If the closure of IRS amnesty programs makes you apprehensive, we can help! Greenback accountants specialize in making the process simple and worry-free. Contact us today, and you’ll be compliant before you know it.